Fair Isaac Corporation reminds credit customers and consumers to keep an alert eye on what might cause their credit scores to drop.
For instance, hundreds of consumers have seen their scores drop after applying for government aid on their mortgages. The application of the loans and mortgages for the new housing loan project of Obama caused at least a hundred points to be slashed off from consumers’ credit scores. The government, as well as other credit bureaus, tried to come up with solutions and ways to compensate the disgruntled consumers.
Aside from cases like these, however, the average credit user is advised to take personal precautions and still be on guard for ways to ensure that their credit stays on top.
Most consumers worry that applying for new credit will cause their scores to drop. In fact, FICO says that there is a possibility of one’s score dropping with the opening of additional credit or credits, but the drop would probably be not large. More than that, consumers need worry less if making multiple loans and inquiries would hurt their scores. Typically, these loans and mortgages are lumped together as only one inquiry, and how it will affect one’s scores are generally insignificant.
Although this is the case, FICO warns that too many inquiries may greatly affect one’s credit scores, especially if the person’s credit history is relatively short. For the record, a single inquiry typically knocks off at least 5 points off one’s credit scores. Granted, the impact that such inquiries may have on consumers’ scores depends on the respective credit history of the individual. As mentioned, shorter credit histories will experience more drastic fallouts if the consumer perpetually makes inquiries.
More than that, Fair Isaac warns consumers not to open too many credit accounts or lines simultaneously, or within short time periods of each account-opening. This may cause lower scores than if the consumer opens a credit line long after he or she opened the previous line he or she has.
Another warning and reminder that Fair Isaac gives is to not rely so much on the inquiries. Inquiries indeed play a role in evaluating one’s scores, however, its role is only minor. Fair Isaac reminds consumers that paying bills on time, keeping their account balances relatively low and reviewing their credit histories are the best way to assess and build one’s credit history.
The recent amendment has mandated the three top credit bureaus in the country to allow credit users one free credit report viewing. Consumers are encouraged to maximize this privilege and keep themselves informed. This step is especially important to people planning on opening new credit lines. It is highly important that the scores from all three credit bureaus agree with each other.
